2012 (10) TMI 154 - AT - Income Tax

Claim u/s. 43B - disallowance as paid after the due date of filing of return of income - Held that - Copy of debit note is filed of the paper book to support the claim of assessee that the amount in question was paid during the accounting period and such amount was paid before the due date of filing of the return - It is well settled law for deduction u/s. 43B that the deduction is allowable on actual payment and when PF contributions are made before filing of the return, the same is allowable deduction & following decision in case of CIT versus Vinay Cement Ltd. 2007 (3) TMI 346 - SUPREME COURT OF INDIA - in favour of assessee. Disallowance of depreciation - Held that - The assessee has filed details of aggregate assets and liabilities which were received on 31.03.2003 and the net fixed assets received on transfer scheme was ₹ 834.01 crores and the assessee claimed depreciation at the lowest rate and whatever addition in the assets was made, the CIT(A) has allowed 50% of the claim of the assessee. Therefore, do not find any infirmity in the order of the ld. CIT(A) in granting relief to the assessee on this issue - in favour of assessee

Summary

Issues:
1. Allowance of claim under section 43B of the Income Tax Act.
2. Disallowance of depreciation and addition of assets during the year.

Issue 1: Allowance of claim under section 43B of the Income Tax Act:
The appeal by the Revenue challenged the order of the ld. CIT(A) allowing the claim of Rs. 9,09,20,000/- under section 43B of the IT Act. The dispute arose from the disallowance of electricity duty and PF liability by the AO. The electricity duty and PF liability were paid by the customers and inherited by the assessee, respectively. The assessee paid the liability before filing the return and claimed it under section 43B. The ITAT upheld the CIT(A)'s decision, emphasizing the actual payment before the due date of filing the return as a crucial factor for deduction under section 43B. The ITAT referred to relevant case laws to support its decision, dismissing the Revenue's appeal.

Issue 2: Disallowance of depreciation and addition of assets during the year:
Regarding the disallowance of depreciation and addition of assets during the year, the AO rejected the depreciation claimed by the assessee. The assessee received assets worth Rs. 834.01 crores under a transfer scheme. The AO disallowed depreciation claimed for only half of the year. The ITAT found that the assets were acquired during the year and directed the AO to allow depreciation at 10% for assets used for less than 180 days. The ITAT upheld the CIT(A)'s decision to grant relief to the assessee, as the net fixed assets received were Rs. 834.01 crores. The ITAT dismissed the Revenue's appeal on this issue, finding no infirmity in the CIT(A)'s order.

In conclusion, the ITAT dismissed the departmental appeal, upholding the CIT(A)'s decisions on both issues. The judgment clarified the requirements for deduction under section 43B and the treatment of depreciation on assets acquired during the year.